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Sanctions in the distribution of sanitary and plumbing materials sector

On 23 May 2013, the Council of the National Competition Commission (“NCC”) sanctioned 22 companies in the distribution of sanitary and plumbing materials sector for their involvement in a series of anti-competitive practices, namely price fixing. The NCC imposed fines exceeding a total of EUR 6.4 million.

The fined companies had entered into agreements for consumers to be charged certain costs. These agreements also set maximum discounts for certain products, and provided for exchanges of information about payment defaults or other commercial data. These agreements aimed to reinforce the companies’ negotiating power with their customers and suppliers and to maintain certain price levels.

The complaint was filed before the Competition Office of the Autonomous Region of Valencia. However, although the practices were carried out mainly by companies based in this region, the autonomous authority shelved the case on the basis that the NCC was competent.

After the NCC inspected the headquarters of several of the companies, three companies submitted leniency applications. These applications were rejected because the NCC considered that the information submitted by the companies brought no significant added value to the information the NCC already had. However, the NCC did award a 10% reduction in the fine imposed on one of the other companies that had actively cooperated with the Investigations Directorate, even though it had not submitted a leniency application. This cooperation seemingly included the submission of particularly useful information before the inspections took place.

The NCC thoroughly examined the concept of economic entity and concluded that three independent companies, among which there were no parent-subsidiary relationships or any common controlling shareholders, formed part of one economic entity. The NCC based its conclusion on the fact that the companies had some shareholders in common, had contracted the services of the same commercial management office (gestor) and what it called “clear indications that they acted in unity”. However, despite declaring that these three companies formed an economic entity, the NCC held that they were three separate legal persons and thus sanctioned and fined them individually, and did not declare them to be jointly liable.